CHAPTER 1
Guerrilla Business Secret #1:
How guerrillas start a company, pick a hot product, and target a market
Let me tell you my own story.
First, I'll tell you how I failed. Then, I'll tell you how my failure led to an astonishing success.
I was sales manager for a publishing company. We recruited college students to sell books door to door during the summer. (I had paid my way through college by selling books and after graduation became a sales manager with the same company.)
After five years as sales manager, I got restless and talked to the top salesmen I had recruited and managed: Mike Rippey and Bill Roman. They were guerrillas from the very beginning. After they graduated, they decided to form a company. They looked around. What could they sell? They discovered a lot of companies who helped schools raise money by selling their products: candy, magazines, candles, and stadium seats.
They thought they could do the same thing with a different angle. Instead of mundane, boring products, they designed products that got kids excited — big, bold, spectacular designs, much more thrilling than candy and magazines. They invited me to join them. I could not resist. I left my comfortable corporate world and became a guerilla.
One of our biggest hits was Happy Hang-ups, Styrofoam bulletin boards cut into interesting shapes. We silk-screened them with hilarious and friendly designs: turtles, frogs, hippos, and happy-face smiles. We used Day-Glo paint, so the bulletin boards were dazzling.
What a thrill it was to stand up in front of one hundred kids in a high school band, pull out the Happy Hang-ups, and listen to the kids scream with enthusiasm! A typical band of one hundred kids would sell four thousand or five thousand bulletin boards in one weekend at three dollars each — the band made one dollar on each and paid us two dollars.
We started with four salespeople and quickly expanded to eight, then sixteen, then thirty-two. To grow to thirty-two we had to get a bank loan. The bank was impressed with our success and readily loaned us the money.
The thirty-two did not sell as much as the original four — only half as much per salesperson — but even at that we were making lots of money. We were eager to go to the top, sell the company, and retire at age thirty.
So we decided to expand to 250 salespeople, a nationwide sales force covering all the high schools in the country. We talked the bank into lending us more money. We thought we could do no wrong, and we convinced the bank of the same.
Well, we found out that we could do wrong! The 250 salespeople sold half as much per salesperson as the thirty-two who had gone before them. We already had paid the salaries of the 250 salespeople in anticipation of great sales — sales that did not happen. We owed the bank and suppliers — way too much. For the first time, we were unable to make our payments on time. We negotiated with our creditors, and they extended our terms. But the sales did not materialize. We ran out of cash. Brokenhearted, we closed the company.
In three short years we had gone from spectacular success to abysmal failure.
I'd been in business for myself for three years, but now I thought of going back to the corporate world. Still, the guerrilla bug had bitten, and I would never be able to work for someone else again.
Mike Rippey, Dennis Snyder, and I decided to try again, so we formed a new company. This time, we looked for a different type of salesperson, someone who had experience in the school system. We recruited principals, band directors, and coaches. We changed our product mix from large, bulky products, which were expensive to ship, to small, elegant products, like fashion jewelry that was easy to warehouse and ship.
We started again, with four salespeople, just like the first time. But this time we grew more slowly — but not all that slowly. We doubled our sales each year, from $1 million in 1979 to $60 million in 1985. Then we sold the company. For the first time in our lives, we had a healthy pile of cash in our bank accounts.
But we did not retire. Retirement had been our original goal, but we still were young, so we thought about other options. We concluded that nothing in the world was more interesting than running a guerrilla business. My friends and I have continued in business over the years, and we will never retire. We love the life of guerrilla entrepreneurs and will keep doing it, over and over again.
My vision, just before I die, is to lift up my head from my coffin and give one last sales pitch. Then I will die with a smile, and they can close the coffin.
CHAPTER 2
Guerrilla Business Secret #2:
How a corporate person becomes a guerrilla
You must have the ability to adapt yourself to a different way of life. Cockroaches are one of the oldest surviving species, outlasting and outwitting all the evolutionary forces arrayed against them.
Most men and women who leave the corporate world to become guerrillas are sick of their inability to control their destiny. They long for a chance to look life straight in the eyes and take responsibility for their own existence.
If you are facing this crossroad, it's scary. There is comfort in that bureaucratic elephant. But it is stifling, and you likely are longing to scramble out.
You can do it. Trust your gut. Trust your instincts. You are a unique person. You are better than you think you are.
All the events of your life are part of you because you have drawn them there. What you choose to do with them is up to you.
You are the only person in this world who has sole charge of your existence. Not just your existence at your desk, or in your car, or in front of your computer. Not just the existence of your brain, but the existence of your soul.
Only you, therefore, can make the decision to become a guerrilla. Most people will advise you not to do it. You will be overwhelmed with negativity. "What? Give up your safe and secure job? Give up your career? Stay with it, and you'll make vice president for sure."
I worked as sales manager for a small but fast-growing publishing company, and I was on the fast track. I was not yet thirty and making more money than most of my former college classmates. The company was like a cockroach — adaptive, clever, a survivor.
One day I came to work and learned that a huge nationwide publishing company had just bought our company. Suddenly, I was part of a bureaucratic, slow-moving elephant. The large corporation beckoned with promises of pension funds, benefits, and promotions. But I didn't like it.
During my years as sales manager, I had managed several thousand college students during their summers of door-to-door book sales. As I mentioned inchapter one, Mike and Bill, two of the best salespeople, got together with me and talked about what they wanted to do after college. They were guerrillas in heart and mind. They did not want to follow the norm and go into the corporate world. When they graduated, they invited me to join them in a new venture.
At twenty-eight years old, I was still young but a few years older than the rest of them. They often looked to me as their leader. But I saw them as bold visionaries who were leading me into a major decision.
I wanted desperately to join them in their venture, but they had no money, just a dream. I was the only one with money, but very little at that. They needed my money and management experience; I needed their imagination, creativity, and audacity.
With great trepidation but equal excitement, I took all my savings and threw those hard-earned dollars into our new venture. I have lived on the edge ever since. It has been one adventure after another. I could never go back into the corporate world.
A friend of mine had a similar choice. He was tempted to leave the corporate elephant, but he couldn't bring himself to take the leap. Today, he is vice president of that company he could not leave, but he looks ten years older than I do. He tells me he wishes he had made the leap with me thirty years ago. He is always worried, always tense. He would like to be president someday, but the bureaucratic in-fighting is vicious. He is tired of playing games and looks at me with a sense of wonder. He has told me that his life has not been fulfilling, and he wishes he had my sense of joy and adventure.
CHAPTER 3
Guerrilla Business Secret #3:
How guerrillas can sell a fantastic product, make a fatal mistake — and recover
Bill and Mike were two of my top salespeople — they'd just graduated from college and were brilliant, wild, uninhibited, and unconventional. Bill's father was a corporate man who had spent his life selling products for a conventional company. Mike's father was president of a Fortune 500 company. Neither Bill nor Mike wanted to follow in his father's footsteps.
They started their own guerrilla company. We kept in touch, and I was fascinated with what they were doing. I kept plugging away at my job as a sales manager, but my heart was no longer in my work. I wanted to join Bill and Mike.
They were on the phone with me almost daily, telling me of the fantastic product they had developed. They were selling silk-screened T-shirts to high school bands. The bands sold the T-shirts for as a fund-raising project and were making tons of money. Bill and Mike were bringing in a lot of cash, too.
I could stand it no longer. Finally, I made a wrenching decision: I quit my corporate job in Tennessee and flew to California where Bill and Mike were silk-screening T-shirts. I had resigned my job and severed my ties; I could not go back.
When I arrived in California, Bill and Mike showed me all the T-shirts they were selling — piles of T-shirts, hundreds and hundreds in blue, yellow, red, and white; six sizes, from children's small to adult large. They had a crew of people screening the T-shirts while Bill and Mike called on schools and launched fund-raising projects with the kids.
I looked at the designs on the T-shirts. My friends told me they were the hottest designs in America — they were all Charles Schultz's designs from the Peanuts comic strip: Snoopy dancing, Lucy flipping out, the Red Baron, and Linus sucking his thumb. No wonder they were so popular.
I carefully looked at a few shirts and asked, "Where's the copyright?"
"Copyright?" said Bill. 'What's that?'
My heart sank. My body shuddered. I was immediately filled with fear. I had been the perfect corporate guy who always did things by the rules. And now here I was, selling T-shirts with Charles Schultz's images without regard for the copyright. I wanted to take the next plane back to Tennessee, but I had resigned my job.
It was May 1971. The school year was nearly over, and they had sold sixty thousand T-shirts. We decided to finish out the school year and start over again in September — with new designs and a new corporate name.
On May 20, Mike got a call from a band director. "We'd like to sell your T-shirts," he said. "We have a hundred kids in the band, and we need money for band camp this summer."
"Great!" replied Mike. "These T-shirts are just what you need. They are selling like hotcakes."
The band director asked, "How many have you sold?"
"Sixty thousand," said Mike. "Everybody loves them."
"Can you give me a few references?"
"Sure!" Mike rattled off the names of other high schools that had sold our T-shirts.
The band director's voice changed to an ominous tone. "I'm the attorney for Charles Schultz," he said. "We want one dollar on each T-shirt. That will be $60,000."
Bill and Mike had made good money on those T-shirts, but most of it was gone. There was no way to come up with that kind of money. Still, Bill and Mike did not seem worried. "Let's just clear out of town," they suggested.
"That's easy for you guys," I said. "You have no credit cards, no reputation, no one knows you. I have a wife and three kids, excellent credit, and a reputation for doing things by the book. They won't go after you. They'll go after me." Even though I had been there for only a couple of weeks, my name was already associated with the venture, and I could not wiggle out of it.
Although Bill and Mike didn't feel the dire sense of doom that I felt, they told me that they were my partners and we'd stick through out together. I was relieved and felt that these were two guys I could trust.
I got my lawyer in Tennessee to help us out. We decided to have Bill meet the Charles Schultz lawyers. Bill was brilliant and wild, with long hair and a look of madness about him. He wore blue jeans and tennis shoes, all ragged and full of holes. "Perfect!" said my lawyer.
The Schultz lawyers took one look at Bill and concluded they were dealing with a bunch of crazy guys fresh out of college. It would be an exercise in futility to demand $60,000. What they really demanded was that we stop selling Charles Schultz designs without paying royalties. They also wanted to teach these young upstarts a lesson. In the end, they settled for $1,200, which the three of us gratefully paid.
The lesson, then, is this: To be a guerrilla, you need to be out there on the edge. You take chances. You are different. You don't play by many of the corporate rules. But there are a few things you simply cannot do! You've gotta be legal!
It was 1971. The Vietnam War was still raging. Most college kids were anti-establishment. My buddies wanted to run the business their own way, but they realized that there was a limit to freedom.
CHAPTER 4
Guerrilla Business Secret #4:
Drive decision making downward
You probably use FedEx for shipping, but you may not realize that each FedEx employee has quite a bit of decision-making power. If you have a package that is delivered late, did you know that if you call FedEx, you could get up to one hundred dollars in credit on the spot? You won't have to wait while the customer service rep consults a supervisor; you get a decision on the spot. Doesn't that make you feel good? Doesn't that make you want to keep doing business with FedEx?
Have you ever been put on hold for five minutes while someone consulted a supervisor for a decision? Did you get just a bit irritated? What if you had to wait thirty minutes? You likely got very annoyed. And what if you had to wait a day? You probably went to the competition.
Have you ever flown on Northwest Airlines? Do you remember when it used to be referred to as "Northworst"? Northwest had the lowest ratings of any airline in customer-satisfaction surveys. A few years ago, however, the airline gave each flight attendant and each ticket agent a book of coupons. If a passenger had a problem, the employee was to give away a free round-trip ticket anywhere in the country. Northwest now gets high customer-satisfaction ratings.
Let me tell you about my own business. It gives me great pride to tell you that we gave our employees all kinds of power back in the 1980s — that was before the idea of "empowerment" became popular. We gave them much more power than FedEx gave their people with the hundred-dollar credit, and we went way beyond Northwest's free round-trip ticket. We told our customer-service reps that they could do anything to make the customer happy.
We had a small company with a big name: Institutional Financing Services (IFS, for short). Our business was fundraising, specifically for schools. Our specialty was fashion jewelry, and our average school bought $5000 worth of products.
Anna was our first customer-service rep — I wish you could have met her. She was twenty-eight years old, enthusiastic, intelligent, and passionate about her work. Within three months, she was managing ten other customer-service reps. I told her, "Look, Anna, my two partners and I want you to make customer service decisions. You're smart. We trust you. And we want your people to make decisions. Don't ask us what to do. Just do whatever it takes to make the customer happy. Pretend IFS is your company, Anna, because you really do own the customer service department."
Then we got all ten of the customer-service reps together and told them, "We have asked Anna to make decisions without consulting us. Now we want you to make decisions without consulting Anna."
About the same time we hired our first professional manager, a controller. His name was Dave. So picture this: The company, IFS, had three crazy entrepreneurs full of ideas, ten customer-service reps full of enthusiasm — and Dave.
Dave thought we were nuts. He did not like letting those customer-service reps make important decisions. "It won't work. They'll give away the company. We'll go broke."
Within six months, however, Dave began to come around. He analyzed the decisions our customer-service reps had made. Although he did not like to admit it, most of those decisions were sensible, with very few mistakes.
